District Court Holds Citigroup Damages Claims Against Wachovia Barred by EESA Section 126(c)
In a case of first impression, Judge Shira A. Scheindlin of the United States District Court for the Southern District of New York has ruled that Section 126(c) of the Emergency Economic Stabilization Act, which was signed into law on October 3, 2008, rendered unenforceable an exclusive negotiation agreement between Citigroup and Wachovia. Citigroup had made a bid to acquire Wachovia, and the parties entered into an exclusive negotiation agreement. The Citigroup bid ultimately failed when Wells Fargo came in with a higher offer, and Citigroup sued, alleging that it had suffered tens of billions of dollars in damages as a result of Wachovia's breach of the agreement. Judge Scheindlin's ruling means that Citigroup cannot collect damages based upon any alleged breach of the exclusive negotiation agreement.